Merchants are targeted in U.S. food-stamp probe

Some investigations focus on whether fraud aids terrorists

April 09, 2006|By Michael Higgins, Tribune staff reporter

Federal authorities have been cracking down on store owners who try to cheat the federal food-stamp program, prosecutors said.

Since September, federal investigations have forced 57 stores around the nation out of the program, in part because of suspicious increases in the amount of food those stores claimed to sell to food-stamp recipients, said Randall Samborn, a spokesman for U.S. Atty. Patrick Fitzgerald.

"We're trying to cut off the flow of money as soon as we detect these unusual spikes of activity," Samborn said.

Some of those investigations are expected to lead to criminal charges, Samborn said.

The food-stamp program, run by the U.S. Department of Agriculture, allows participants to use an electronic benefits card, known as a Link card, to buy food at stores that participate in the program.

In a typical fraud, the cardholder pretends to buy, for example, $100 worth of groceries, but no groceries change hands, Samborn said. Instead, the store owner gives the cardholder $70 in cash, then files for the full $100 reimbursement from the government.

In at least some cases, federal authorities have investigated whether money generated by food-stamp fraud has been sent overseas to fund terrorist groups, said Phyllis K. Fong, inspector general of the Agriculture Department.

Food-stamp fraud "creates the potential for laundered moneys to be transferred overseas, where it is not always possible to track how the funds are used," Fong told a U.S. congressional committee in July 2003.

Fong testified that as agriculture officials noticed more food-stamp money moving overseas, their investigators began participating in the Federal Joint Terrorism Task Force and Operation Green Quest, a national project to target money-transfer businesses that send funds overseas to terrorist groups.

Samborn said Saturday that he didn't know if the Chicago-area terrorism task force was involved in any food-stamp fraud investigations.

One food-stamp fraud case pending in federal court in Chicago involves a man who was tried on terrorism charges in Florida last year.

Hatem Fariz, a former leader of a Chicago mosque, was indicted in 2004 on charges that he committed fraud in 1999 and 2000 while he owned T&T Foods, a convenience store in Chicago.

Federal prosecutors said Fariz reported more than $1.66 million in food-stamp benefits for a 1 1/2-year period despite the store's estimate that its annual food sales wouldn't exceed $150,000. Fariz has pleaded not guilty to wire fraud and money laundering charges.

Fariz moved to the Tampa area in 2002 and federal prosecutors in Florida charged him in a terrorism-funding case. But in December, a federal jury acquitted Fariz on the majority of the charges and was hung on the rest. He faces a possible retrial on the remaining charges.